Our View: 'Clean-coal' plant a bad deal for all of us in Illinois

Thursday

Aug 2, 2012 at 12:01 AMAug 2, 2012 at 1:21 AM

Picture this: A $3 billion facility, more than 200 permanent jobs, 1,000 construction jobs and an alternative energy project that would use “clean coal” from southern Illinois. What could be wrong with that? Well, quite a bit.

INSIDE: How they voted

BELOW: How they voted

Picture this: A $3 billion facility, more than 200 permanent jobs, 1,000 construction jobs and an alternative energy project that would use “clean coal” from southern Illinois. What could be wrong with that?

The promise of jobs, economic development and clean energy is tempting, but the overall costs to consumers, farmers and businesses in Illinois make this deal a bad one.

It’s not often that groups such as the Illinois Manufacturers’ Association, the Sierra Club, the Citizens Utility Board and the Illinois Farm Bureau join to oppose legislation. Those are just four of about 25 organizations that oppose SB 3766. Such a broad, diverse coalition demonstrates how much is wrong with this bill.

A version of the legislation has been around for years and was signed by Quinn a year ago. However, Chicago utilities opted out because Leucadia’s synthetic gas would cost them more than natural gas. Leucadia officials said they couldn’t build the plant without those utilities so the legislation was reworked to force Ameren and Nicor, utilities that serve people outside of Chicago, to buy Leucadia’s gas, essentially paying for the capital and operating costs of the plant.

If Leucadia’s deal were a good one, it should have been able to line up a buyer rather than force two utilities to buy its product.

The plant is being built in Chicago and paid for by the rest of the state. That’s unfair.

Natural gas prices are at all-time lows and are expected to be low for many years because of new technology and discovery of new sources of natural gas.

The U.S. Energy Information Agency’s 2012 Energy Outlook estimates that natural gas prices won’t exceed $7 per million Btu until 2035. The Leucadia plant’s price will start at more than $9 per Btu.

Granted, it’s a 30-year deal and a lot can happen in 30 years, but for at least two-thirds of that time, natural gas will be much cheaper than the synthetic version.

Mark Denzler, vice president and chief operating officer of the Illinois Manufacturers’ Association, said during a conference call last week that currently synthetic natural gas sells for four times as much as natural gas. The coalition he is a part of estimates that an average Illinois consumer would pay $170 more a year if the plant is built.

The higher costs for consumers would increase exponentially because the costs for food, gasoline and other goods also would rise.

Jeff Adkisson, executive vice president of the Grain and Feed Association of Illinois, pointed out that farmers use a “tremendous amount” of natural gas to dry and store crops. He said the price of Leucadia gas would increase costs for drying by an average $35,000 a year each for grain elevators. Those costs would be passed on to the rest of us.

Adkisson said the costs for ethanol, which is used in gasoline, will increase because natural gas is used in its processing.

The “clean coal” component is overrated. The legislation calls for at least 35 percent Illinois coal to be used. The rest would be petroleum coke, a byproduct of oil refining that other power plants in the region already burn.

It’s clear this is a bad deal for consumers and the Sierra Club thinks it’s a bad deal for the environment because the coal gasification process can create more pollution than traditional coal-burning plants. It also requires a significant water supply.

This deal is costly, unfair and unneeded. Quinn should be poised to use his veto pen.